Inner SPARK August 2024
Spark Multifamily Investment Group
I help you achieve financial freedom and create the life of your dreams through passive real estate investments.
Hi Everyone,
As we approach the end of August and Summer; schools across the United States are back in session or will soon commence the new school year.
We can look forward to Labor Day Weekend, the onset of Fall, and the start of both the college and NFL football seasons.
Indications are the Fed is finally ready to reduce interest rates which will certainly help the commercial real estate market. Of course, predicting what the Fed will do or not do is often an exercise in futility.
The upcoming Presidential Election will dominate media coverage and both political parties will forecast doom if their party doesn't win in November. Statements will be made about the impact of the election results on the economy and real estate market. I'll take all those kinds of statements with a grain of salt.
Nothing will change with Spark's approach to investing. We continue to look for acquisitions that will provide our investors good returns with a high level of safety.
While not I am not a religious guy.......
The Serenity Prayer may be useful over the coming months.
On a personal note: Laura has a (location unknown) road trip planned to celebrate my 70th birthday at the end of August. I feel blessed for the totality of my life including all the experiences I have had. Best of all, I am excited and optimistic about what the future holds. Gratitude is one of the major keys to happiness.
Rowley's Reflections
The past couple of years have been challenging for commercial real estate acquisitions due to significantly higher debt costs.? Multifamily transaction volumes nationally have plummeted more than 75% in 2023 and 2024 (year-to-date) compared to the peak during the pandemic and post-pandemic period. This drop follows an unusually high level of sales activity in 2021 and 2022, when rents were rising rapidly and debt was cheap. Property values have also decreased by 15-25% during this time, varying by region, market, and asset class [see graph].
It’s understandable that owners of stabilized, high-performing properties are holding on until values improve, which explains the low transaction volume. Some owners facing expiring loan terms or variable-rate debt are under pressure to sell, creating opportunities for buyers to acquire properties at attractive prices. However, there is still often a gap between seller and buyer pricing expectations.
There are indications that interest rates will moderate and rent increases could gain momentum. At Spark, we continue to hunt for potential acquisitions. While we have passed on a number of opportunities, we have closed deals on assets we find appealing with favorable pricing.? The off-market acquisitions have been more attractive than those brokered through traditional channels, thanks to our resourceful, well-connected team in Greenville.
THE LATEST NEWS FROM SPARK
As we continue to search for our next acquisition, we are pleased to annouce we have a heavy value add multifamily deal in Greenville under contract.
Due diligence has commenced and if it all checks out, we hope to be able to present it to you all next month.
We will update you as soon as we work through all the details.
This Month’s Newsletter
Once again, we’re delighted to offer educational content about multifamily investing to you through Inner Spark. Much of this content deals with the ever evolving multifamily market. After several boom years, we are entering a new phase of the economic cycle.
In this edition, you’ll find:
- A RealPage article on Forecast Points to Improved Rent Growth in 2025.
- An Upstate Business Journal article on Growth in Easley and its attempts to strike balance between development and community quality of life.
- A USA Today article on Wealthy millennials are rejecting stocks for 'alternative' investments. What are they?
- A Yardi Matrix National Multifamily Report July 2024.
- A Money Geek article on The Top Cities for US Job Seekers in 2024.
RealPage Forecast Points to Improved Rent Growth in 2025
RealPage's forecast suggests that rent growth will improve in 2025 due to a resilient U.S. economy and robust employment gains. With the addition of over 532,000 jobs in the second quarter of 2024, the total job creation has surpassed 1.3 million year-to-date. The delivery pipeline expects over 629,000 apartments to be completed in 2024, but this supply will decrease by 20% in 2025, with about 497,000 units. Despite strong demand, rent growth in 2024 has been slower than expected, with most top markets seeing 2% to 3% annual growth.
Looking ahead, 2025 is anticipated to see a more favorable economic landscape with weaker supply and strong demand. Approximately 40% of the top 50 markets could experience annual rent growth exceeding 3%, while around 55% are expected to see growth between 2% and 3%. This improved outlook is driven by the anticipated reduction in new apartment deliveries and sustained employment growth.
Click the link to read the whole report.
Growing Easley trying to strike balance between development, community
Spark Investment Group recently completed the Townes @ Silos acquistion in Easley. This is the second acquisition in Easley we have completed over the past year or so. This article highlights the growth in Easley and the City's effort to properly control said growth. In our opinion, the current moratorium on new housing developments only increases desirability of the properties we have acquired in Easley.
Easley, a city in Pickens County, is grappling with rapid growth while trying to maintain its small-town character. Mayor Lisa Talbert, the city’s first female mayor, initiated a six-month moratorium on new housing projects to update zoning and land-use regulations. This measure aims to balance growth with preserving the community’s identity. Meanwhile, the Economic Development Alliance of Pickens County, led by Ray Farley, focuses on attracting high-skill manufacturing jobs to boost economic prosperity, leveraging the region’s quality of life and strategic location.
领英推è
Easley by the numbers:
- Population: 22,921
- Median household income: $62,551
- Median age: 42.8
- Manufacturing employment: 14.1%
- Retail employment: 11.7%
- Educational services/health care employment: 25.6%
Click the link to read the whole article.
Wealthy millennials are rejecting stocks for 'alternative' investments. What are they?
I have always been "baffled" as to why REAL ESTATE has been considered an "Alternative" investment.
To me, it has ALWAYS been a fundamental time-tested asset class to invest in.
I've seen numerous studies that indicate the greatest wealth has been created via real estate investment.
Younger investors appear to be more open to investments outside the stock market.
This article covers this current trend.
National Multifamily Report
The Yardi Matrix Multifamily National Report for July 2024 highlights that national multifamily rent growth has been modest, with a 0.8% year-over-year increase. This growth, although weaker by historical standards, reflects the market's strength, supported by steady demand and economic factors like a 2.8% GDP growth in Q2 2024 and 1.3 million jobs added in the first half of the year. Notably, several Sun Belt markets, which previously experienced negative rent growth due to oversupply, have started to see rent increases as the market stabilizes.
In addition to the national trends, the report notes that the occupancy rate remained stable at 94.6% for the seventh consecutive month, despite a slight year-over-year decline of 0.4%. The report also underscores the ongoing challenges in markets with high supply levels, such as Austin and Raleigh, where rent growth remains negative. However, the overall outlook is cautiously optimistic, with signs of improvement in some struggling markets as the year progresses.
Click the link to read the whole article.
The Top Cities for US Job Seekers in 2024
In MoneyGeek's 2024 rankings of the best cities for job seekers, Greenville, South Carolina, stands out as the 8th best city in the U.S. Greenville's ranking is driven by its strong job and wage growth, along with low unemployment rates and affordable housing options. These factors combine to make Greenville an attractive destination for those seeking employment opportunities in a competitive market while enjoying a high quality of life.
Greenville's position among the top cities highlights its appeal, particularly for job seekers looking for a balanced environment that offers both economic opportunities and a livable, affordable community. This ranking places Greenville in the spotlight as a key city for those planning to relocate in search of better job prospects in 2024.
Click the link to read the whole article.
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